Quantum and AI intersect at Rigetti
Rigetti Computing trades at a discount, with six out of nine analysts covering the stock recommending a 'buy' and the remaining three advising a 'hold'. The average target price is $30.71, suggesting a 90% potential increase from the current level over the next 12 to 18 months. John McPeake, an analyst at Rosenblatt Securities, is the most bullish, projecting a price of $40 per share. McPeake reiterated his optimistic outlook on July 29, reaffirming his strong conviction in the stock.
The company faces significant hurdles, including unresolved issues with technology development and product launch delays. These ongoing challenges have contributed to a 30% decline in Rigetti's stock price year to date. Despite this, McPeake remains confident that the company can overcome these obstacles and meet expectations. Quantum computing's ability to handle complex data for AI models positions Rigetti as a dual-exposure play, currently undervalued by both historical benchmarks and Wall Street forecasts.
SoundHound AI is more directly linked to AI revenue than Rigetti, with the majority of its income coming from AI-driven products and services. Its shares have dropped 42% year to date. Four analysts covering the stock all maintain a 'buy' rating, with an average target price of $12.75, implying a 110% potential increase. Scott Buck, an analyst at H.C. Wainwright, is the most bullish, projecting a target price of $20 per share, which would represent a 228% gain for investors.
Buck highlighted 100% sales growth in 2025, driven by new customer acquisitions and successful client renewals. He expects the company to achieve positive adjusted EBITDA by late 2026. SoundHound AI is scheduled to report earnings on August 5, and Wall Street sees significant potential in the company's ability to boost sales through cross-selling to existing customers. This strategy could reduce costs and increase profit margins, as selling to existing clients often avoids the high expenses associated with acquiring new ones. Progress on these goals could strongly influence the stock's performance following the earnings report.
Artificial intelligence is viewed as a multi-decade, multi-trillion-dollar opportunity, with analysts highlighting the robotaxi market and data center expansion as major growth areas. The technology is already driving transformative changes across industries. These two stocks are well-positioned to benefit from both sides of the AI growth story, as they leverage the advancements in computing and data processing to drive innovation.
According to the Nasdaq source, some experts estimate the robotaxi market could reach $10 trillion and the data center build-out could be a $7 trillion opportunity. These investments are still in the early stages, and the companies' ability to scale and deliver results in 2025 and 2026 will determine whether the anticipated upside materializes. For now, both Rigetti Computing and SoundHound AI represent compelling opportunities for investors seeking exposure to the AI revolution.